•1. Tax breaks. For the time being, the U.S. Tax Code lets you deduct the interest you pay on your mortgage, property taxes you pay, and some of the costs involved in buying your home.
•2. Gains. Between 1998 and 2002, national home prices increased at an average of 5.4 percent annually. The Seattle market has been even more spectaular than this. And while there's no guarantee of appreciation, a 2001 study by the NATIONAL ASSOCIATION OF REALTORS® found that a typical homeowner has approximately $50,000 of unrealized gain in a home.
•3. Equity. Money paid for rent is money that you'll never see again, but mortgage payments let you build equity ownership interest in your home.
•4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax. Talk to your tax adviser about the details on this.
•5. Predictability. Unlike rent, your mortgage payments don't go up over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will rise.
•6. Freedom. The home is yours. You can decorate any way you want and be able to benefit from your investment for as long as you own the home.
•7. Stability. Remaining in one neighborhood for several years gives you a chance to
participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.
Although there are many reasons to own, there are many reasons why someone would consider not owning. Ownership offers many downsides too!
- The lack of flexibility and mobility are probably at the forefront of the cons to homeownership.
- Some also see that tax as a liability- now they have to pay for property taxes and assessments.
- Maintenance is now a problem that falls on your shoulders. You can't call your Maintenance man to come by and fix your leaky water tank at 2AM because You are the maintenance man. Planning and costs can be expensive and you might end up hiring out most of the repair work.
- The market might collapse! I might be buying at the wrong time. True! There is a whole lot of bubble-speak out there...
I think that no matter what, homeownership still is the American dream. Less and less of us are really taking advantage of this cornerstone to wealth-building. In Washington State, we have less than 40% homeownership and this is why I think it is so vital to health of our industry to improve and support the first time homebuyer market.
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